Is Austerity Worth the Pain?

I have never lived in a time when a government actually cut its budget. In the ‘terrible’ Thatcher and Reagan years, despite screeching panic headlines of apocalyptic doom, both socialist states continued to increase spending on ‘social services,’ such as the NHS and Medicare, year on year. The only “cuts” related to some imaginary figure that the political opposition ‘would have spent’ compared to the real increases in spending actually made by the governments of the day. The truth is, imaginary money is even easier to ‘spend’ than tax money, and tax money is so easy to spend that governments keep on spending even what they haven’t got.

But sometimes, even governments become embarrassed by the gulf between their promises and their performance. By ‘embarrassed’ I mean that they worry their antics might get them kicked off the gravy train. Then, they spring into action to preserve themselves, and the great argument begins: Will we look better if we raise taxes, or if we “cut” spending? Here’s an article on the actual consequences of each alternative: